The wrong way to save on healthcare

Employer expenditures for workers' health insurance are down from last year, but the reasons why may be deceiving

Topics: Barack Obama, Democratic Party, Health Care, Mitt Romney, RobertReich.org, U.S. Economy,

The wrong way to save on healthcare (Credit: AP/Pablo Martinez Monsivais)
This originally appeared on Robert Reich's blog.

Employer outlays for workers’ health insurance slowed from a 9 percent jump last year to less than half that — 4 percent — this year, according to a new survey from the Kaiser Foundation. Good news?

Our political class believes it is. The Obama administration attributes the drop to the new Affordable Care Act, which, among other things, gives states funding to review insurance rate increases.

Republicans agree it’s good news but blame Obamacare for the fact that employer healthcare costs continue to rise faster than inflation. “The new mandates contained in the health care law are significantly increasing the cost of insurance” says Wyoming Sen. Mike Enzi, top Republican on the Senate health committee.

But both sides ignore one big reason for the drop: Employers are shifting healthcare costs to their workers. (The survey shows workers contributing an average of $4,316 toward the cost of family health plans this year, up from $4,129 last year. Many are receiving little or no employer-provided coverage at all.)

Score another win for American corporations — whose profits continue to be robust despite the anemic recovery — and another loss for American workers.

Those profits aren’t due to a surge in sales. Exports are down (Europeans, Japanese and Chinese are all pulling in their belts) and American consumers don’t have the dough to buy more.

The profits are largely due to lower corporate costs, especially when it comes to their payrolls. Employer-provided health and pension contributions are shrinking, and the real median wage continues to drop.

High unemployment has given companies more bargaining leverage over their workers, who have to accept lower real pay and benefits or risk losing their jobs.

When it comes to health insurance, employees increasingly have to choose between health-insurance policies with sky-high premiums or with sky-high co-payments and deductibles. And since they can’t afford the former they’re opting for the big co-payments and deductibles – or no insurance at all.

The result is fewer visits to the doctor and less use of other medical services.

This is a new trend, and it comes despite the Affordable Care Act (which hasn’t been fully phased in). And it wouldn’t be worrisome if we were seeing too much of doctors before, and using up medical resources we didn’t need.

But it’s worrisome if it means less preventive care, or health problems going untreated until they become chronic illnesses or crises.



Healthcare costs do have to be better controlled. They now claim 18 percent of our entire economy. But the best way to control them isn’t by cutting back care. It’s by wringing inefficiencies out of the system.

Our healthcare system wastes 30 cents of every dollar spent on healthcare, according to new calculations by the well-respected Institute of Medicine. Much of it is wasted on repeated tests, and a huge portion wasted on paperwork – between doctors and hospitals and specialists and insurers, to justify expenditures by one group to be paid by another.

A single-payer system would be far more efficient.

So back to my original question. Is the dramatic slowdown in employer healthcare costs good news? It all depends. If we and our families are in good health, or we’re high earners who can afford good health coverage without big co-payments and deductibles, or if we own lots of shares in companies showing higher profits because they’re trimming pay and benefits – or we’re in all three categories – it’s probably good.

But if we’re none of these, it might not be good news – especially if it means we’re getting less care than would otherwise keep ourselves and our families healthy.

At the least, if we’re concerned about the health and well-being of all Americans, we need to find out much more before we celebrate.

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His new movie "Inequality for All" is in Theaters. His widely-read blog can be found at www.robertreich.org.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 17
  • Close
  • Fullscreen
  • Thumbnails
    John Stanmeyer

    Overdevelopment, Overpopulation, Overshoot

    Container City: Shipping containers, indispensable tool of the globalized consumer economy, reflect the skyline in Singapore, one of the world’s busiest ports.

    Lu Guang

    Overdevelopment, Overpopulation, Overshoot

    Man Covering His Mouth: A shepherd by the Yellow River cannot stand the smell, Inner Mongolia, China

    Carolyn Cole/LATimes

    Overdevelopment, Overpopulation, Overshoot

    Angry Crowd: People jostle for food relief distribution following the 2010 earthquake in Haiti

    Darin Oswald/Idaho Statesman

    Overdevelopment, Overpopulation, Overshoot

    “Black Friday” Shoppers: Aggressive bargain hunters push through the front doors of the Boise Towne Square mall as they are opened at 1 a.m. Friday, Nov. 24, 2007, Boise, Idaho, USA

    Google Earth/NOAA, U.S. Navy, NGA, GEBCO

    Overdevelopment, Overpopulation, Overshoot

    Suburban Sprawl: aerial view of landscape outside Miami, Florida, shows 13 golf courses amongst track homes on the edge of the Everglades.

    Garth Lentz

    Overdevelopment, Overpopulation, Overshoot

    Toxic Landscape: Aerial view of the tar sands region, where mining operations and tailings ponds are so vast they can be seen from outer space; Alberta, Canada

    Cotton Coulson/Keenpress

    Overdevelopment, Overpopulation, Overshoot

    Ice Waterfall: In both the Arctic and Antarctic regions, ice is retreating. Melting water on icecap, North East Land, Svalbard, Norway

    Yann Arthus-Bertrand

    Overdevelopment, Overpopulation, Overshoot

    Satellite Dishes: The rooftops of Aleppo, Syria, one of the world’s oldest cities, are covered with satellite dishes, linking residents to a globalized consumer culture.

    Stephanie Sinclair

    Overdevelopment, Overpopulation, Overshoot

    Child Brides: Tahani, 8, is seen with her husband Majed, 27, and her former classmate Ghada, 8, and her husband in Hajjah, Yemen, July 26, 2010.

    Mike Hedge

    Overdevelopment, Overpopulation, Overshoot

    Megalopolis: Shanghai, China, a sprawling megacity of 24 Million

    Google Earth/ 2014 Digital Globe

    Overdevelopment, Overpopulation, Overshoot

    Big Hole: The Mir Mine in Russia is the world’s largest diamond mine.

    Daniel Dancer

    Overdevelopment, Overpopulation, Overshoot

    Clear-cut: Industrial forestry degrading public lands, Willamette National Forest, Oregon

    Peter Essick

    Overdevelopment, Overpopulation, Overshoot

    Computer Dump: Massive quantities of waste from obsolete computers and other electronics are typically shipped to the developing world for sorting and/or disposal. Photo from Accra, Ghana.

    Daniel Beltra

    Overdevelopment, Overpopulation, Overshoot

    Oil Spill Fire: Aerial view of an oil fire following the 2010 Deepwater Horizon oil disaster, Gulf of Mexico

    Ian Wylie

    Overdevelopment, Overpopulation, Overshoot

    Slide 13

    Airplane Contrails: Globalized transportation networks, especially commercial aviation, are a major contributor of air pollution and greenhouse gas emissions. Photo of contrails in the west London sky over the River Thames, London, England.

    R.J. Sangosti/Denver Post

    Overdevelopment, Overpopulation, Overshoot

    Fire: More frequent and more intense wildfires (such as this one in Colorado, USA) are another consequence of a warming planet.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>